RURAL MARKETING OPPORTUNITIES AND CHALLENGES

What is Rural?
"All the places that fall within the administrative limits of a municipal corporation, municipality, cantonment board, etc., or have a population of at least 5,000 and have at least 75 per cent male working population in outside the primary sector have a population density of at least 400 per square kilometer are urban, and rural India, on the other hand, comprises of all places that are not urban!"

Myths and Realities

MYTHS  Rural cannot afford our products  Rural markets will be mainly an extension of urban markets  Technological innovation is not needed in rural markets  Highly price-inelastic and only suited for 'value-for money' products not premium quality products REALITIES  Account half of national income  Rural market encompasses over 70% of population  More than technological breakthroughs there is need to offer consumer-centric innovations  Propensity to spend on premium high quality products, backed by strong brand values, that correspond to their aspirations.

WHY RURAL?
With 128 Million HH the Rural POP is three times urban 58% of disposal income is from rural. First time buyers for many product categories likely to be from rural (70% of the time coke buyers from rural)

GROWTH HISTORY
Products Analgesic tablets Batteries Coconut Oil Iodized salt Safety Razor Blades Tea Toilet Soaps Washing Soaps LIC Nail Polish Lipstick Shampoo Mosquito repellants Share or Market 45.7% 56.2% 41.6% 51.4% 54.1% 51.3% 41.9% 54.6% 55% 77% 65.6% 76% 68.7%
Source: NCAER

Rural

Washing Powder / Liquid 46.4%

Focus Rural
Urban markets getting saturated, most companies do not have a choice but to go rural. 1 % increase in Rural income converts in to 10,000 cr. Of buying power. By a report of MR firm AC Nielsen, in April May 2008, the rural market has outpaced urban India in certain key product categories.

Focus Rural
With most of the retail markets getting saturated in tier-I and tier-II cities, the next phase of growth is likely to be seen in the rural markets. Different Organizations have carved inroads into the heart of rural markets. Some others are slowly making headway in this area viz. Coca Cola India, Eveready Batteries, LG Electronics, Philips, BSNL, LIC, Britannia and Hero Honda. Corporate are now using rural as a strategy for expansion and sustenance.

OPPORTUNITIES
Of the 1 million BSNL connections, 50% are in rural India The billing per cell phone in rural Andhra is higher than Urban. Of the 20 million who have signed up for Rediffmail, 60% users are from small towns. India s insurance market is growing at 32 34 % annually. The Indian pharmaceuticals market is regarded as one of the fastest growing in the world HUL estimated that only about 1.5 lakh villages have been explored out of over 6 lakh villages. Hence a big gap of untapped potential exists.

CONTD..
Infrastructure is improving rapidly In 50 years only, 40% villages have been connected by road, in next 10 years another 30% would be connected. Number of "pucca" houses doubled from 22% to 41% and "kuccha" houses halved (41% to 23%). Rural literacy level improved from 36% to 59%.

RURAL MARKETING CHALLENGES

LOW PER CAPITA INCOME LARGE NUMBER OF DAILY WAGE EARNERS SEASONAL CONSUMPTION POOR INFRASTRUCTURE,ROADS,POWER HIGH COST OF CONVERSION CUSTOMISATION V/S STANDARDISATION BRANDING SCATTERED HIGHLY DISPERSED POP DIVERSE CULTURE/LANGUAGE

Rural Marketing Challenges

Inability of small retailers to carry inventory without substantial line of credit and company support. Lack of credible research. Lack of skilled workforce. Mass communication and promotional problems.

Innovations & Creativity Key to Success

Buffaloes dyed black with Godrej hair dye because they fetch a higher price. Washing machines used to make frothy lassi in bulk in Punjab. Wall paints used to paint the horns of cattle to make identification easier and to achieve a long-term protection from theft. Iodex is rubbed into the skins of animals after a hard day s work to relieve muscular pain. The Diesel Gen Set Engines are converted into specially crafted vehicles (called JUGAAD).

Conclusion
Thorns and hurdles are part of life. Every urban has its roots in rural. Only thing which we need to have is passion towards our goal. 230 million rural consumers spread over approximately 600,000 villages in rural India. Improving the lives of the billions of people at the bottom of the economic pyramid is a noble Endeavour. It can also be a lucrative one C.K. PRAHLAD